Economic report clouds Nevada tax debate

CARSON CITY, Nev. (AP) — Lawmakers, lobbyists and business representatives are split over the significance of a new economic report showing minuscule personal income growth in Nevada in 2002.

The report by the U.S. Bureau of Economic Analysis showed per capita personal income in Nevada rose by only 0.2 percent in 2002 over 2001, ranking the state 49th of 50.

The national average per capita personal income growth in 2002 was 1.7 percent. The national inflation rate in 2002 was 1.6 percent, far exceeding Nevada’s modest increase.

The Legislature is considering nearly $1 billion in tax increases recommended by Gov. Kenny Guinn to fund his 2003-05 state budget.

Greg Ferraro, a lobbyist for the Nevada Resort Association which supports a new business tax on gross receipts, said those who use the federal report to argue against tax increases are being disingenuous.

“We need additional revenue for the public education system,” Ferraro said. “We need to strengthen the base of the economy.”

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But Dan Burdish, chairman of a group called Nevadans for Tax Restraint, said taxes are inflationary because they add to the cost of goods and services.

If the Legislature passes a broad-based business tax, Nevada residents will see even more of their income consumed by higher costs, he said.

Lawmakers wrestling with the tax increase proposals offered by Guinn and others say new taxes are needed to fund state programs, but they’re trying to minimize the economic effect on working Nevadans.

Senate Taxation Chairman Mike McGinness, R-Fallon, and Assembly Taxation Chairman David Parks, D-Las Vegas, say reports such as the one released Wednesday need to be considered, but there will be no way to avoid a tax increase entirely.

“Everyone agrees there is a need to raise taxes,” McGinness said. “We are trying to be as reasonable as possible.”

Parks said the data should not be a surprise, given the effects of the Sept. 11, 2001, East Coast terrorist attacks on Nevada’s economy.